Using a 14% cost of capital, calculate the net present value for each of the ind

Question

Using a 14% cost of capital, calculate the net present value for each of the independent projects shown in the following table, and indicate whether each is acceptable. Initial investment: Pr. A 26,000, Pr. B 500,000, Pr. C 170,000, Pr. D 950,000, Pr. E 80,000 Cash inflows: Project A Years 1-10 4,000 each yr. Project B 100,000, 120,000, 140,000, 160,000, 180,000, 200,000 Project C 20,000, decreases 1,000 each year for 10 yrs. Project D 230,000 years 1-8 Project E 0, 0, 0, 20,000, 30,000, 0, 50,000, 60,000, 70,000

Explanation / Answer

NPV for project A=4000*5.21-26000= -5160 NPV for project B=553887.9-500000=53887.9 NPV for project C=86331.7-170000=-83668.3 NPV for project D=1066939-950000=116939 NPV for project E=89963.3-80000=9963.3

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